Path to Insight

Sept. 1, 2008

Financial departments make or break organizations. Can BI improve healthcare CFO success?

Healthcare in the U.S. is on the cusp of monumental change. Already, the hospital and provider community is dealing with varying stages of consumer-directed healthcare and public access to quality and cost metrics; heightened focus on compliance with evidence-based care protocols; and, a staggering number of tier-network and reimbursement programs. Each of these fundamentally affects revenue streams, expense management and the ability to compete. Considered alongside the external economic forces impacting all industries, it is clear that healthcare industry executives must evaluate an increasing amount of information to best assess their organization’s health and future.

“If a business intelligence solution can’t help you make sound decisions about your company’s future quickly, easily and with confidence, it’s neither good business nor intelligent.”
Jim Goodnight, Ph.D, CEO, SAS

Healthcare in the U.S. is on the cusp of monumental change. Already, the hospital and provider community is dealing with varying stages of consumer-directed healthcare and public access to quality and cost metrics; heightened focus on compliance with evidence-based care protocols; and, a staggering number of tier-network and reimbursement programs. Each of these fundamentally affects revenue streams, expense management and the ability to compete. Considered alongside the external economic forces impacting all industries, it is clear that healthcare industry executives must evaluate an increasing amount of information to best assess their organization’s health and future.

In the middle of this healthcare ecosystem is an avalanche of information that is expanding on an hourly basis. Whereas 10 years ago, skeptics argued that the abundance of paper-based business processes in healthcare precludes the adoption of electronic information systems, our industry has now seen a strong uptake of data collection and management systems covering administrative processes, clinical care and all functions in between.

Given this progress, one might assume healthcare CFOs and finance departments are now in a much better position to make informed decisions: Insights into reimbursements, utilization and staffing, capital management, emergency care spending and many other areas should be within our grasp. Yet CFOs know the reality — valuable data assets sit in electronic silos spread across their organizations.

Healthcare executives and care providers cannot afford to spin their heads from one data silo to another, grasping for slivers of insight. If we are to improve productivity, cost management and care outcomes, we must adopt better mechanisms for making informed decisions and corresponding business improvements. That type of cultural shift towards precision and certainty can only be attained through evidence-based knowledge derived from an integrated view of the enterprise.

The Changing Role of Finance in Healthcare

The role of the finance department continues to evolve and become more strategic as the healthcare industry transforms. The CFO must ensure transparency; streamline consolidation and reporting; improve the accuracy of plans and budgets; align day-to-day operations with long-term goals; predict and respond to market changes; reduce costs and streamline processes; understand profit drivers and grow profitability; and, ease the strain of compliance requirements. In short, healthcare CFOs must understand the entire business of healthcare.

A CFO’s ability to effectively manage and harness financial, operational or clinical data is crucial to an organization’s success. However, discovering the value hidden in an organization’s diverse and distributed data is an ongoing challenge. Many finance departments still use manual, complicated and inaccurate reporting tools to view data; and, financial processes are not always aligned throughout the enterprise. Meanwhile, the healthcare industry continues to capture more and more data, typically centered on organizational staffing disciplines.

Data silos have proliferated for care support, patient data and diagnostics, clinical care, finance and accounting. In many organizations, a litany can be found resonating in the halls: “The information needed does not exist,” or “We still use paper records,” or “The data is not clean enough,” and, the ever present “We do things differently.” Some of these rationales represent legitimate challenges to leveraging technology to make better decisions; however, none of them represents insurmountable obstacles that have not been solved in other healthcare institutions.

Brigham & Women’s Hospital (BWH) in Boston, Mass., implemented a performance management system built upon a platform of business intelligence (BI) and analytics. This system integrates, analyzes and distributes data from all patient contact and care delivery — from 29 sources and 50,000 patient encounters a year — into best practices and operations throughout the hospital, whether in a patient care setting or the business office. Intelligence is shared with executive management, physicians and frontline employees. Staff at all levels can see how their actions — individually and as a whole — affect the bottom line and patient satisfaction.

“There are huge workforce issues, particularly in nursing, and in technical and specialty areas,” says Michael Gustafson, M.D., BWH’s vice president of clinical excellence. “The public expects increased accountability to make sure that hospitals are providing quality care and safe environments. There is an increased demand among patients for better service from physicians, too. And, patients are getting more involved; they have higher expectations when they come in for care.”

To successfully address these issues, organizations must integrate performance measures from both provider and business organizations, and forge a single strategy for delivering the right set of services to the public. However, without incorporating all relevant data, across-the-board improvements would be difficult at best. BWH’s analytical BI system has contributed to improved reimbursement arrangements from payers as well as lowering care delivery expenses.

“To make informed decisions you need the data capabilities, and to drive change, you need accountability and incentives,” says Gustafson. “When you put all of the management pieces in place, you have the ability to identify and implement real improvements.”

A CEO’s Perspective

Jim Goodnight, Ph.D, founder and CEO of SAS, is no stranger to the data silo scenario. For more than 30 years, his company has helped organizations such as CIGNA HealthCare, Healthways and Highmark to link and leverage disparate corporate data assets and create clearer views of performance.

A CFO’s ability to effectively manage and harness financial, operational or clinical data is crucial to an organization’s success. However, discovering the value hidden in an organization’s diverse and distributed data is an ongoing challenge.

“Business intelligence powered by analytics enables all layers of an organization to exploit every data source to understand the past, examine the present and predict the future, and confidently act on this knowledge. Business intelligence is derived through a technology platform that allows for full access to any current data store, or future data sources, without creating or investing in additional data silos.”

Dr. Goodnight sees healthcare organizations progressing through a business intelligence maturation process over time, starting with simple reporting and eventually growing to leverage the most sophisticated types of analytical methods. Whereas most healthcare organizations today focus on basic reporting, Goodnight believes a more comprehensive approach to BI and analytics ensures that organizations can continue to improve over time.

“A technology platform is truly BI-oriented if it supplies a full scope of analytic tools, ranging from simple summaries to advanced predictive modeling, from which better and more relevant insight into the business can be achieved.”

Of course, getting the information together and conducting the analysis is only a small part of the process. Ensuring that the right people are able to view and act on the information in a way that is natural to them is equally challenging. This is especially true in healthcare, where potential information consumers include both medical and administration functions with a wide variety of skill sets. Assuming that basic reporting will produce the desired end results is where many organizations miss the mark.

“If a business intelligence solution can’t help you make sound decisions about your company’s future — quickly, easily and with confidence — it’s neither good business nor intelligent,” says Goodnight.

BI in Practice

Though industries such as financial services and retail adopted business intelligence more quickly than healthcare, many hospitals and providers now have an initiative focused on BI. Some are in the early-stages of development and some are further along the learning curve.

Maine Medical Center in Portland, Maine, has a leading-edge focus on patient care and quality that is, in part, driven by focusing key performance metrics on ensuring that evidence-based care gets delivered. Measuring everything from staff hand-washing compliance to whether patients are taking the right dosage of medicine, Maine Medical compares care performance metrics against financial objectives. This facilitates a better understanding of the impact changes have on both patient and financial health.

An example of the payoff from BI and analytics can be seen in the hospital’s treatment of congestive heart failure: The Joint Commission sets a list of standard treatments that every hospital needs to offer every congestive heart failure patient. It’s an extensive list that includes measuring the function of the heart’s left ventricular valve to counseling patients on diet and lifestyle. When Maine Medical first started its measurements, only 60 percent of patients were receiving all the treatment and counseling that evidence-based medicine sets as a standard of care, however, that has improved.

“In our most recent month we were at 95 percent performance,’’ says Doug Salvador, associate chief medical officer. “We’ve been averaging over 85 percent for four consecutive months on the heart failure core measures.” Meeting a high percent of guidelines is critical to receiving the highest reimbursements from Medicare, Medicaid and those private insurers with various stages of pay-for-performance programs.

Whether initiated by the Chief Medical Officer or the CFO, the culture of collaboration that BI can nurture is present at BWH, Maine Medical and other leading organizations. Still, there is significant opportunity for growth in BI adoption within healthcare and the CFO can lead this evolution by continuously including all disciplines within the organization in the performance evaluation process. Financial performance reporting and forecasts will always be more complete with a better understanding of the impact every care delivery change has on margins.

“It has never been more important that we find ways of improving healthcare in the U.S.,” says Goodnight. “BI delivers opportunities to better grasp the markers of profitable operations and patient care dynamics. This impacts every healthcare CFO.”

The application of advanced analytics enables the asking and answering of the harder questions that will ultimately impact the financial performance of every healthcare organization. By aggregating and analyzing patient, provider and benefit plan data alongside financial metrics, better decisions related to health outcomes and evidence-based medicine protocols can be made — insights valuable to both providers and payers.

BI can help remove the risk around decisions focused on disease management, clinical effectiveness, safety and new consumer-directed healthcare programs. Indeed, practically every major issue facing healthcare today demands greater access and analysis of broader and deeper sources of data than our traditional silos have provided.

Jason Burke (left) is worldwide director of health and life science and Rick Ingraham is global healthcare strategist for SAS. Contact them at [email protected] and [email protected].

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